The Basis Point

The Basis Point delivers concise, timely insights on private credit from ’s Credit team, focused on market dynamics, structural trends, and emerging risks shaping the lending landscape.

Each edition distills complex developments into clear perspectives that highlight dislocations, frame risk, and inform lenders and investors.

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Credit Performance
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May 4, 2026
2026-05-04

PIK – the Silent Stress Indicator

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Source: Company filings; U.S. Securities and Exchange Commission (Forms 10-K and 10-Q) for selected BDCs.

Takeaway: BDC PIK income reached nearly 10% in Q4 2025, exceeding its COVID-era peak - highlighting increased reliance on non-cash interest, often consistent with rising borrower liquidity pressure. Lenders and borrowers are increasingly relying on PIK interest to preserve the optics of performing loans while quietly compounding risk.

Credit Performance
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Apr 28, 2026
2026-04-28

Recovery Rates are Collapsing

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Source: J.P. Morgan, “Default Monitor: High Yield and Leveraged Loan Research,” North America Credit Research, April 1, 2026.

Takeaway: When defaults do happen, lenders are recovering far less than historical norms. The real risk in private credit isn't just whether borrowers default, it's what you get back when they do.